Crisis of the Week: Lumber Liquidators Fights Flooring Foes | WSJ

Lumber Liquidators was the subject of this week’s crisis, as the company has seen its stock price take a wild ride down and back up after allegations raised in a ’60 Minutes’ story. The story alleged the laminate-flooring material sold by the company didn’t meet emission standards for the chemical formaldehyde. The story prompted one U.S. senator to call on federal agencies to investigate, and the company’s stock plunged as a result of the negative coverage.

Vincent Schiavone, executive chairman, ListenLogic: “Rule number one: Don’t make things worse! That is exactly what Lumber Liquidators did by agreeing to an on-camera interview. Lumber liquidators is experiencing an attack crisis in the digital world where consumers, media, activists, lawyers, regulators and politicians are aligned as stakeholders on an issue damaging to the reputation and value of the company.

“While the strategic goal driving stakeholders, short sellers and tort lawyers seems to be financial in nature, the enabling trigger issue is the health and safety of ingredients in the product. The core issue driving the conversation is corporate profits at the health risk of the customer.

“Lumber Liquidators chose to participate in the ‘60 Minutes’ story, something they should not have done. Often putting senior executives on the spot in an interview puts the company at greater reputation risk than issuing a statement. A written statement would have been less damaging. If a company is going to respond to an attack issue they need to be prepared to answer the key question: ‘What did you know and when did you know it?’ That answer determines if you can or want to apologize, take responsibility, reassure that all is OK and promise it will never happen again.

Read the entire piece here.

ListenLogic Featured by Deloitte in WSJ

Deloitte recently requested ListenLogic as expert source for their Wall Street Journal feature entitled ‘Strategic Risk: Emerging Technologies and Business Model Disruption.’ The piece focuses on the major disruptions as declared by over 300 executive respondents to Deloitte’s ‘Exploring Strategic Risk’ study.

ListenLogic Co-Founder, Vince Schiavone, is featured in the story, discussing the massive impact of social media on strategic enterprise risk, which executives state as the top technology threat to their businesses in Deloitte’s study.

As Schiavone explains, “As the social, mobile and consumer ages advance and converge, identifying the complex array of threats from the open social universe in real-time has never been more critical or challenging for corporations. The nature of threats is not necessarily new to corporations; however, with social media serving as a catalyst, the speed at which these threats can emerge and develop into crises can result in increased damages to an organization’s revenue and reputation.”

Read the entire piece here.

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Social Intelligence Mitigates ‘Risks Businesses Fear Most’

We recently reviewed Deloitte’s ‘Exploring Strategic Risk’ study which surveyed over 300 C-level executives and found social threats to corporate reputation is now of paramount concern. Now we look at a survey by Aon, which lists the ‘Top 10 Risks Businesses Fear Most.’

Aon details the growing complexity of the risks and crises facing businesses. Of the Top 10 risks Aon ranks, four are deeply rooted in social media and can often be detected, identified and tracked using advanced social intelligence and threat detection capabilities.

No. 7: Business Interruption: This can present to a corporation is a wide array of forms. Aon’s study cites examples like natural disasters, power outages and terrorist attacks, however more common disruptions ranging from consumer boycotts, activist protests and even employee sabotage can wreak massive havoc on business operations. These types of threats are commonly organized and detected from all corners of the open social universe.

No. 4: Damage to Reputation: This echos Deloitte’s study indicating reputation is among the greatest concerns for executives which can come in all sorts forms that companies are often ill-prepared for. Among the common issues damaging reputations and revenues for companies are threat of employee sabotage, brandjackings (impersonating or takeovers), denial of service attacks and activist campaigns. As Aon states, “Since reputational events often arrive with little or no warning, organizations are forced to respond in real time while the firm’s economic losses are mounting.” This is exactly why corporations are relying on real-time social threat detection services.

No. 3: Increasing Competition: While controlling competition is impossible, understanding the market reactions to competitor actions to drive strategic response is critical to managing and mitigating these risks. Social intelligence is a major factor in achieving this by understanding the attitudes and behaviors related to one’s competitors across millions of shoppers and consumers.

No. 2: Regulatory Risk: As the government places increased regulations across an array of industries, from financial services to food & beverage to pharmaceuticals, many regulators are taking to social media to communicate and campaign . Smart companies are tracking the activities of regulators, litigators, journalists, consumers, activists and influencers to gain deep understanding of regulatory and industry issues and where these issues are reaching tipping points that can damage their businesses.

As the focus of crisis management and enterprise risk shifts towards this social dimension, the need for enhanced detection and tracking of these threats on a real-time basis has increased dramatically for corporations and brands.

Related Resources:

Aon’s ‘Top 10 Risks Businesses Fear Most.’

Deloitte /Forbes ‘Exploring Strategic Risk’ Survey

Corporate Compliance Insights: Understanding Enterprise Social Risk

Study Confirms Social Risk a Top C-Suite Concern

Deloitte and Forbes recently released an executive survey titled ‘Exploring Strategic Risk.’ According to the research gathered from over 300 C-level executives, social threats to corporate reputation is now of paramount concern. In fact, 40 percent of the surveyed executives cited reputational risk as their top concern, compared to only 27 percent who cited competition.

This increase in concern for reputation protection is significant, growing 14 percentage points since 2010. The dramatic shift in focus towards reputational risk and away from economic, competitive and model risks is driven in large measure due to the explosive growth of social media, which allows for immediate, widespread engagement, making it nearly impossible for companies to address and manage the influential attacks on their brand, reputation and ultimately revenue without sophisticated detection an tracking solutions.

As Henry Ristuccia, Deloitte Global Leader, Governance, Risk and Compliance, explains, “The time it takes for damaging news to spread is quicker, it goes to a wider audience more easily, and the record of it is stored digitally for longer. Even in an environment where economic conditions remain tough and technology threatens business models, this is why companies place reputation at the top of their strategic risk agenda.”

As the focus of risk shifts towards this social dimension, the need for enhanced detection and tracking of these threats on a real-time basis has increased dramatically. To address this growing concern 52 percent of surveyed executives have increased the budget for and frequency of monitoring risks, with a focus on social threats and 43 percent have started to monitor and manage this aspect on a continual basis, realizing that social threats do not have business hours. These brands in large measure are moving away from narrow first-generation keyword tools and are shifting to sophisticated, big data, model-driven command centers.

Related Resources:

Deloitte / Forbes Exploring Strategic Risk Survey

SecurityWeek: Social Threats of Greatest Risk Concern for Executives

ListenLogic Business Intelligence Command Center Overview

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ListenLogic CEO Presents to Wharton SEI Center Board

ListenLogic Co-Founder and CEO, Vince Schiavone, recently presented at The Wharton School’s SEI Center for Advanced Studies in Management’s Annual Board Meeting. The executive session, titled ‘Bridging the Silos – Revving Up for the Next Big Thing,’ took place at the Kimmel Center for the Performing Arts and featured a wide array of session on topics ranging from the NFL to political campaigns.

Vince’s featured session, titled ‘Big Data Social Intelligence: Reducing Risk, Building Brands and Driving Growth With Social Media’ focused on how the crossroads of big data and social media is revealing unprecedented valuable insights and opportunities for companies and is becoming instrumental in growing and protecting corporations and their brands.

Participants in the session included executives from organizations like Advanta, Estee Lauder, Hewlett-Packard, The Milken Institute and SEI, among many others.

The Wharton School’s SEI Center for Advanced Studies in Management was founded in 1990 and was designed as the first “think tank” on the future of management education. Previous presenters include Peter Drucker, Kenichi Ohmae, Percy Barnevik, Esther Dyson and John Seely Brown.

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